Nektar Squeezing Along

Nektar Therapeutics (Nasdaq: NKTR) released its 2007 year-end financial results yesterday, finishing its post-script to a topsy-turvy 2007. The year was a tumultuous one for Nektar, as marketing partner Pfizer (NYSE: PFE) gave the rights to inhalable insulin drug Exubera back to Nektar after a miserable launch.

Still, last year saw some bright spots for Nektar. After hearing the familiar refrain from investors and analysts that so many biotechs receive about excessive spending (here and here, for example), newly installed Nektar CEO Howard Robin pledged to cut the company's cash burn and workforce, while still investing in its pipeline.

Fortunately, his efforts have had an effect; Nektar cut its workforce by more than 50%, from 1,100 employees to 500. Guidance is for non-GAAP operating cash burn of only $50 million to $75 million this year.

On the pipeline front, Nektar will have four phase 2 trials running this year and two new compounds entering phase 1 clinical trials. The first new pipeline candidate is a pegylated taxane that is designed to be a more efficacious and safer version of Sanofi-Aventis' (NYSE: SNY) blockbuster cancer treatment, Taxotere. The second drug entering phase 1 studies is an inhaled version of the antibiotic vancomycin, which will presumably compete with drugs like ViroPharma's (Nasdaq: VPHM) pill form of vancomycin.

Earlier in the year a rival inhalable insulin compound from Novo Nordisk (NYSE: NVO) joined Exubera on the chopping block after Novo discontinued its development of the drug. Nektar is still looking to bring Exubera back onto the market, though, and stated yesterday that its second-quarter goals include finding a marketing partner for the compound and for its smaller second-generation inhalation device.

Exubera is costing Nektar $2 million a month while the company pays for the facilities and employees that need to be maintained. If no suitable partner can be found within a reasonable amount of time, then Nektar said it plans to shut the program down. The good news is that any milestone payments from partnering Exubera are not included in the company's cash burn guidance for 2008; depending on what kind of deal it makes, Nektar could see its cash burn decline even more this year.

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